Good day everyone. Welcome to MTN Rwanda results presentation for the year 2022. I’m Allan Kagenza, and I’m the Senior Manager in charge of Investor Relations at MTN Rwanda. On the call today we have a Mapula Bodibe, who is our Chief Executive Officer, and Mark Nkurunziza, who is our Chief Finance Officer. Mapula Bodibe will take you through the operational and strategic review. Mark will then take over the financial review. We’ll then have the ending with Mapula Bodibe giving us a look ahead for 2023. We’ll then have a Q&A session afterwards where you can ask your questions and we’ll be able to respond accordingly. Please note that you can write your questions in the Questions tab. Thank you, over to you Mapula Bodibe.
Thank you, Allan, and good afternoon to all our shareholders, investors and stakeholders present. I am very pleased today to share with you the operational and strategic review for MTN Rwanda for the year and December 2022.
We are operating in a very challenging macro-operating context and 2022 was a year that really faced many challenges in this prospect. We saw inflation surging to more than 13-year level highs at a rate level of 21.6% which really drove an increase in commodity prices and resulted in subdued domestic food production. We also saw a slowdown in economic activity, which was driven by a lower than anticipated agricultural production, mainly driven by a unfavorable weather conditions in the country. Unemployment remained high, and we saw that the GDP growth rate slowed down quite significantly compared to the prior year. And although we saw some interventions from a regulatory perspective, where they introduced some instrument to try and manage the macroeconomic challenges, and such as a increase in policy interest rate by 2.5 percentage points to 7%, as well as expanded subsidies to help support the ailing agricultural market. But despite that, we were able to deliver very strong growth, which showed very strong resilience for our operation.
In terms of operational highlights, we saw a very strong growth in our base, our customer base growing to 6.8 million customers, which was a 5.9% growth year-on-year. From a data user perspective, we grew to 2.3 million customers at about 9.0% year-on-year growth. And then from a MoMo user perspective, we grew by 16.3%, helping us reach and high of 4.3 million MoMo connected users in 2022. And all these non-financial indicators helped us to achieve the highest market share in Rwanda, which continues to grow relative to competition every year.
In terms of network coverage, we were very proud to deliver a 98.7% population coverage driven by the addition of 120 sites in 2022, which really shows our commitment to drive towards 100% Population coverage in the coming years. This helped us to deliver a strengthened financial performance of RWF224 billion in total revenue, which helped deliver a EBITDA margin of 48.3% for the year.
In terms of our highlights from a non-financials perspective, very proud that active data users continues to grow. Smartphone users grew by 22.8%. Of course, this continues to be a priority for us, which currently has helped us to achieve 1.5 million smartphone users connected to the network. And then from a CAPEX investment perspective, we increased our investment to by 28% year-on-year delivering an investment of RWF47.1 billion. And from a home broadband perspective, we were able to connect 6,100 connected homes to the network, supported by both our fixed wireless as well as fiber connectivity. Consumption on data continues to surge, reaching a growth of 35.2% year-on-year.
Mobile Money, which was really a big highlight for our growth, and 2022 showed some really strong fundamentals in terms of strong subscriber growth, strong transaction volumes as well as strong revenue, reaching a high of RWF74.6 billion revenue delivered at the end of 2022. What’s really notable is that that revenue contribution was driven by a strong growth in advanced services revenue, which also currently contributes at about 18.7%.
Another strategy, which was a key pillar for growth in 2022, was the acceleration of our Merchant payment strategy. And we were able to grow our Merchant payment to 141,000, which means that there are 141,000 payment points throughout the country, allowing our more than 2 million active MoMo pay users to transact across the country. This is very much in line with our strategy to drive digital inclusion, enabling accessible payment of services in the country. From an Ayoba active users perspective, we managed to reach a high of 345 000 users, which helped us to deliver just over a million digital services subscriptions for the year.
Very quickly on our key financial highlights 19.9% service revenue growth, which was really a very solid performance ahead of budget. We also saw the 17.9% data revenue growth despite the delay in 4G, we were able to deliver that very significant growth driven by higher consumption as well as users. And on FinTech, we managed to really outgrow our expectation, achieving 47.7% FinTech growth, which really was driven by the accelerated payments strategy, as well as the advanced services contribution.
From an EBITDA perspective, we achieved a growth of 0.6%, achieving 48.3%. Although the profit after tax was impacted mainly as a result of the impact of the license renewal, which happened in 2021 and from a voice revenue perspective, really muted growth, mainly driven by value destroying offers from the competitor, as well as the reduced demand for voice services as more and more customers migrate towards data. And this helped us to deliver a free cash flow performances of 2.25% growth year-on-year.
Of course, whilst we focus on our core financial as well as commercial priorities, we are also very proud of our role as a responsible corporate citizen as we continue our focus on ESG. We managed to reduce our carbon emissions by 6.2% driven by a number of activities, including the solar power pilot plant at our data service center, which allows us to have energy offered off grid as well as an expansion of our electric vehicle fleet to 23% from 15%. In the prior year, from a sustainable society’s perspective, one of our mandates is to drive digital and financial inclusion and we were very proud to have achieved that by delivering 9% growth in data users, which is representing just under 200,000 new active users compared to the prior year, we achieved a 63.3% customer penetration on mobile money, adding more than 330,000 new mobile money users compared to the prior and we are very happy to have achieved a 33% female representation within our MTN Rwanda employee base representing our diversity and inclusion strategy.
From a sound governance perspective, we achieved a reputation survey score of 81%, which was really supported by our stakeholders as well as partners, demonstrating our efforts to remain in good standing with regulators as well as stakeholders.
From an economic value add, MTN Rwanda continues to be a very strong contributor in the country, where we delivered RWF62.8 billion contribution in taxes to the Revenue Authority. In fact, we were very proud to be recognized as one of the best large taxpayers in the country for 2022. And our investment was really strong in that we delivered RWF47.1 billion showing that 28% growth compared to the prior year, obviously showing our commitment to development of infrastructure to drive connectivity across all regions of the countries to enable connectivity for all and leaving no one behind. For an unemployment perspective, we were happy to achieve a 60,000 distribution agent footprint. Distribution remains a key competitive advantage for us and that enabled us to deliver RWF26.2 billion in commissions ready driving employment in the country, and thereby making sure that we drive, you know the economic and GDP growth of the country.
In terms of how we measured against our medium-term guidance, we are pleased that we were able to meet and exceed our expectations in that regard. Our service revenue grew by 19.9%, which was more than our expectation of meeting growth.
We also managed to outgrow our expectations in the FinTech platform space by growing 47.7% more than double digit, and this has really, really propelled our growth in the in the bottom line, as well as the top line from an EBITDA margin perspective or stable EBITDA margin was delivered achieving 48.3% performance at the end of last year.
And then from a portfolio transformation, we are at an advanced stage of our structural separation process and we expect that to complete in the next coming months, as we try and drive increased value for our business as well as our shareholders.
From a dividend payout perspective, we are very pleased that we will be able to deliver on our target of distributing 50% distributable income on the dividend payout. We are just waiting for final approval from our board as well as shareholders in that regard. I will now hand over to Mark to take you through the financial review. Thank you.
Thank you very much Mapula,
Dear shareholders, good morning, good afternoon. I’m always pleased to come before you to present the financial performance of MTN Rwanda, and for this year 2022, we are seeing quite impressive results with our service revenue growing by 19.9% year-on-year and our expenditure increasing by 17.8% which is a growth rate below our revenue growth.
This resulted in Earnings Before Interest Tax Depreciation and Amortization (EBITDA) of RWF108 billion. And we are particularly really pleased to see that we have crossed the RWF100 billion mark for our EBITDA. This translated into an EBITDA margin of 48.3%, which is 0.6% points higher than last year, that depreciation and net costs and finance costs that come below EBITDA were high and as we had communicated in previous sessions this is directly related to the license renewal that we incurred in 2021. And that has trickled down all the way to profit before tax, which is showing a year-on-year drop, as well as profit after tax showing a year-on-year drop of 12.8%.
We’ve talked already about the capital expenditure that was driving network footprint, increasing sites, and the intensity at 21% reflects the heavy investment that we made. Free cash flows were positive mainly due to the good performance of the EBITDA. We’ve seen our market share increase, we’ve seen our subscriber base increase in terms of data subscribers, as well as mobile money subscribers.
Looking at the revenue across, we see that the year-on-year growth that that comes up very vividly is on mobile money, that is 47.4% year-on-year growth. We also see that data revenue has been increasing quite impressively 17.7%, voice coming behind at 4%. In particular to the FinTech revenues, although basic services contribute the highest to the overall envelope for FinTech revenue, In terms of year-on-year growth we’ve seen that advanced services is accelerating at 121.8% year-on-year growth.
The EBITDA is quite healthy 20.8% overall year-on-year growth. We talked about the CAPEX, that grew at 28.0% year-on-year, and this direct impact on the free cash flows that grew 2.3% year-on-year.
Looking at the shape of expenditure, as I mentioned earlier, overall expenses that grew by 17.8%. The cost of sales year-on-year growth 30.8% mainly due to the high costs of the 4G data cost of sales, that we all know we’ve been offloading a lot of traffic from 3G to 4G and been dealing with the wholesaler for 4G, this has had a direct impact on the costs.
On OPEX we containing our costs, and trying to bring in all the efficiencies, despite the fact that some of the costs in OPEX include a 3% of turnover that goes into health subsidy to government and these 3.0% of turnover increased from 2.5% in the early part of 2021. As you can see that the selling and marketing costs continue to be part of the OPEX that we are driving to deliver on the top line.
In terms of capital expenditure, the biggest size of our expenditure goes into the network. This speaks to the number of network sites that we’ve been rolling out. We’re happy to say that in 2022, we added 120 sites. That came from 1,095 sites and closed the year with 1,215 network sites.
In terms of the health of the of the business, you continue to see a healthy balance sheet with total assets growing to RWF465 billion representing a 10.5% year-on-year increase. The Intangible asset will always see this come down as we amortize the license costs over the next nine years now. Total Equity, still posting the annual growth of 21.8% even after we had paid out the dividends. I thank you so much for your attention and I’ll be very glad to hand back over to my Mapula.
Thank you Mark for those very positive and ready resounding financial performance results. I will now take the shareholders and investors through the outlook for 2023. I think we’ve seen that 2022 was a very successful year for MTN Rwanda. We’ve seen a surge in revenues, we’ve seen the continued growth in subscribers. And in terms of 2023, our key priority is going to be first and foremost continuing to grow our customer and market share. We are operating in a market that is still at 80% mobile penetration, which means that of our 13 million population, we still have just under 3 million potential users that are not yet acquired. Our strategy is going to continue to acquire customers, particularly in the regions where we still see opportunity for growth driven by very competitive value propositions as well as access to smartphones and devices.
Continued focus on brand leadership and customer experience, we were able to achieve very positive Net Promoter Score (NPS) results from a customer experience perspective. We know that this will continue to be a priority for us in the mandate that we play to serve our customers in Rwanda.
A key priority for us will be to really consolidate and accelerate the growth we are seeing on service revenue. We have seen a slowdown in voice revenue, mainly driven by dilutive pricing and destructive value proposition from competition. Our approach here is going to be focusing very aggressively on price re-engineering, as well as Customer Value Management (CVM)to try and eke out continued growth from voice perspective, because we believe that there’s still an opportunity for driving voice revenue. From a data perspective, we are growing at double digit, as you would have seen, but we see that growth accelerating with the imminent launch of 4G. We believe that the launch of 4G will drive even further growth on the data side as more and more customers migrate to 4G devices as well as consume higher bandwidth of data as well as services.
We also saw towards the end of 2022, a strong growth in our enterprise segment. This is an emerging portfolio, which we are very excited about. We are seeing an outlook of continued revenue growth from enterprise as we diversify our service offerings for our top enterprise customers in the country.
In terms of driving new revenue streams, as I’ve mentioned, the 4G rollout will drive incremental growth, we see huge potential in the home broadband market. Rwanda is largely a market that is still very connected on mobile. We see a lot of prospects for growth, which will also contribute to the growth in data revenues. We currently are connecting homes at about 6,100. We are expecting this number to more than double in the new year as we rolled out fixed wireless services to more and more users. Of course, digital services will continue to be a focus area for us as more and more customers start to consume 4G services, they will start to demand a more, you know optimize a pool of services such as video, as well as social media to be able to satisfy their data consumption needs.
From an ESG perspective, we’re going to continue on our focus on project zero, which is driving a reduction in carbon emissions. We are planning to introduce pure electric vehicles in the next few months, which will really help us to amplify our efforts in that space. Our project Twese which is really around driving inclusion for all citizens that are differently abled, we’ll continue with that focus and then school digitization, which is really the third pillar of our inclusivity strategy, which is really driving the inclusion of schools and connectivity to make sure that we are able to get children from a young age being able to enjoy digital and financial services.
In terms of the medium term guidance, we are very optimistic that despite the continued pressure of inflation, which remains at a very high 21% as we started the new year, we’re very optimistic that we will continue to see growth with a more optimized strategy that is focused on actualizing our business objectives for 2023.
In terms of our investment case, as a listed company, we believe that we still have a very compelling growth story. 2025 is basically an ambition that we are working towards to really continue growing. In fact, this year MTN Rwanda will be turning 25, this will be our 25th year of operation in the country. We believe that MTN Rwanda is continuing to offer good value to all shareholders as well as investors as a key market player.
First and foremost, we are still the leader from market share perspective with a very strong competitive advantage, very robust row investment strategy, good infrastructure that is able to deliver good quality of service for our customers across all our segments. We still foresee growth across all business units in this regard. We believe that we are very well positioned for the long term in the way that we are planning to roll out 4G, which will promise further growth in the core revenue business. We believe that the introduction of BankTech as well as remittance services in the FinTech business will continue to accelerate rate growth in that portfolio. We believe that the brand will continue to grow with more and more focus on customer experience which will drive further advocacy amongst our users as we improve our service offering.
From a demographic perspective, we have a very young population, 60% of our population are below the age of 30 years. We think that the youthful population really presents a strong case for particularly digital services growth in the future. Services such as video, services that are not yet fully taken up in the market will really start to continue to grow as we get more and more smartphones in the hands of every user. We believe that we are still very well positioned for driving further growth and fintech further growth on data. And this will continue to drive digital and financial inclusion. We are an active and responsible partner in the socio-economic development of our society, we are actively involved in all the national priorities and continue to invest through our MTN Foundation.
In the profile, we believe that we present a very strong and attractive return profile. The strong cash flow position allows us to still be very viable in terms of day-to-day operations, as well as the long term. We have had consistent dividend payments very much in line with the expectation of shareholders. We have had value-based capital allocation, which continues to allow our business to grow. We are very confident that MTN Rwanda presents a very compelling growth story and we invite our shareholders and our investors to continue with us on this journey as we celebrate 25 years of operation in Rwanda this year. Thank you very much.
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